A former Treasury minister who resigned in anger over the handling of fraudulent coronavirus loans said it was “happy days if you were a crook” at the start of the pandemic.

Lord Agnew, who resigned from his role in January in the House of Lords, slammed the Treasury’s anti-fraud efforts as a “Dad’s Army” operation as he predicted that the cost of Covid loan fraud would significantly surpass Government predictions.

He said he thanked border force officials for retrieving “suitcases of cash” set to leave the country as the level of fraud was so high.

It comes two months after the Treasury confirmed that it wrote off £4.3 billion worth of the £5.8 billion of fraud witnessed across its Covid business loan schemes.

The ex-minister said he stepped down from his role after deciding he could not defend actions in regards to bounce back loans for smaller firms, where the Treasury reported £4.9 billion worth of fraud.

“I was asked a question to defend our track record on this particular intervention about bounce back loans and I could not stand up with any great integrity and say we did a great job, because we hadn’t,” he told the Treasury Select Committee.

“Intellectually and at the top policy level, I believe it was an important intervention – we had to get the money out quickly to legitimate businesses and give them the support they needed.

“But on the fraud side, it was just a Dad’s Army operation.”

The former minister said it took officials “six weeks” to create a system which could catch fraudsters making duplicate claims for loans but that “60% of the money had already gone out of the door”.

“I was writing letters of congratulations to border force staff for picking up suitcases of cash leaving the country,” he commented.

“It was happy days if you were a crook in those first few months

“I believe very strongly that the taxpayer deserves that the Government should use their money wisely and an issue like the management of countering fraud is a cross-party issue.

“I don’t think there is anybody who would condone a weak system which allows money to fall into the laps of crooks, and that’s what I saw happening.

“In any of these situations you try and bring about change from inside the tent but you get to a point where that just doesn’t seem to be working.”